Today I ended the day -$640.75. AVEO was not my best trading today.
MARA was a great trade today. It had the perfect morning para for a short entry. I went in 1/2 on that push and was ready to add on another push to the .60’s if we got it, but we didn’t. I then was patient on my covers and got a few really nice exits. Very straight forward trade for me.
AVEO, on the other hand, got the best of me today. Honestly, I am lucky I did not get burned big time on it. Some of my entries were great and the others not so much. As I reflect on this trade there are two main issues with how I played it, 1) I sized in too quickly 2) I did not stop out at the appropriate spot, I got a little stubborn. First, my entries. The first 3 circles are great entries in my opinion. They were on big volume pushes and speed up in price action. The other entries you see were more made out of FOMO. I did not want to miss sizing in on the big snap. That was a mistake. The x on the chart below marks where I should have exited the trade. I actually had planned to do so, but I got stubborn and decided to hold to $2 because I figured that is where it would have its next chance to stuff. The logic was sound and turned out to be exactly right, however, I had sized in too large to hold that high. I needed to exit so I could re-enter, but I didn’t. This resulted in me not being able to add in anymore after the big stuff in the 2’s. My buying power was maxed out. I was in 15K shares when I added at that third circle. Had I played it correctly and been able to add after the $2+ stuff I would have ended up with a nice gain on this play.
Even with the poor entries, I could have exited this trade with a small gain. I had my buy to cover order in at 1.76. As you can see though the support was at 1.80. It held once and I held on adding the last little bit I could, $2000 shares. It then held 1.80 a second time and that is where I took the loss. It ended up pulling again and hit where I had my covers. But honestly, I can’t say I regret my cover. It held again and at that point, it was 50/50 that it would continue higher or pull lower. Due to my inappropriate size, I could not risk it going higher. My risk to reward profile at this point was all wrong. The risk was just too big to hold any longer. Sure, I will be sad if this stock pulls further today, but I am not here to gamble. I had already flirted with that too much on this trade. My poor trade management forced my hand.
Now many might say, how can you say that those first two circles were good entries, look how far it went. It’s easy in retrospect to say the true volume push and stuff were at the break of $2, but without that part of the chart, those first two entries were at the highest volume of the day up to that point, followed by big down volume. It just so happens they saved it both times. It’s ok that I would have been wrong on those first two entries. Had I played my entries correctly, the loss on the 1.80’s b/o would have been minimal.
In looking back on this trade, with 20/20 hindsight, the safest short entry to start in would have been at that arrow. That is after it had the huge stuff.
I wanted to document this trade today so I can learn from it and improve! That’s what is important in this game.
On the bright side though I did not let the fear of taking a loss on these trades today keep me from playing them…lol!
I’ve noticed that stocks that gap up preemarket big on unworthy news then close higher then they opened (like $AVEO did on 6/23/2017) are prime short squeeze candidates the next day. Tomorrow I’m planning to short $AEVO if it gaps down a little but if it gaps up I plan on being extra careful and most likely avoiding the trade due to risk of another short squeeze. Anyway everyone has their bad days in trading just thought I would give my two cents on the setup.
PS Thanks for all the post you do they are helping my trading out a lot.